Qatar & Glencore Buy Stake In Russian Rosneft

Qatar and Glencore purchased a 19.5% stake in Rosneft, Russia’s largest oil company.

The Kremlin has announced a $11.3 billion dollar deal to sell a 19.5% stake in the country’s largest oil company, Rosneft, to Swiss Glencore and Qatar’s sovereign wealth fund.

The move was called the largest privatization deal, and the largest sale and acquisition in the global oil and gas sector in 2016, by the Russian President Vladimir Putin.

Glencore, where the Qatar Investment Authority is majority stakeholder, said that they will be paying 300 euros for the purchase, with the rest coming from Qatar and lending banks. British Petroleum already owns 19.75% of the Russian state-owned company.

The Russian government has for long now been planning to sell parts of state-owned assets to help balance budget deficits amid a two-year recession caused by Western sanctions and a rapid drop in global oil prices.

Rosneft is the world’s largest listed oil producer, which under the new deal, will give Glencore a five-year right to purchase an additional 220,000 barrels of oil a day from them for its trading business.

Despite Russia’s boost in oil production, pumping and exporting more oil this year than in previous recent ones, their oil exports revenue dropped by 27% to $46 billion (between January and August 2016). This was largely the impact of the global plunge in crude oil prices.

The deal will not only have a positive outcome on Russia’s federal budget, but will also mark a turnaround for the London-listed Glencore. Earlier they had seen a collapse in share prices and were planning to sell-off assets to cut their huge debts.